Factbox: Key political risks to watch in Iran

(Reuters) - Iran's escalating nuclear dispute with the West and a plan to slash food and fuel subsidies will further test the nerve and authority of hardline leaders who dealt sternly with unrest after last year's disputed election.

The Islamic Republic seems as determined as ever to press ahead with its atomic activities despite economic pain caused by a U.S.-led drive to isolate the major oil producer, including new U.N. measures targeting the powerful Revolutionary Guards.

President Mahmoud Ahmadinejad's government may have largely re-asserted political control at home with a crackdown on the opposition which challenged his 2009 re-election in the streets.

But its plan to push through cuts in an annual subsidy bill of up to $100 billion may spark renewed public anger.

The Oil Ministry faces the tough task of raising the $25 billion it says the energy sector needs in new investment each year to prevent crude exports from drying up. Economic growth and foreign exchange earnings will largely depend on the oil price, which hit an eight-month low in May before rebounding.

Below is an outline of the main political risks for Iran:

SANCTIONS HARMING IRAN

Despite Iran's last-minute bid to avert a fourth round of U.N. sanctions by making concessions on a stalled nuclear fuel plan, six major powers agreed on a Security Council resolution that was approved in a Council vote on June 9.

The United States and its Western allies dropped proposals targeting Iran's oil sector to win Chinese and Russian backing.

But the U.N. resolution is still expected to hurt Tehran and this could explain why it tried to derail the sanctions push and Ahmadinejad's outburst against Moscow last month.

It expands existing U.N. measures by further restricting Iran's banking sector, bans the sale of more types of heavy weapons and calls for setting up a cargo inspection regime similar to one in place for North Korea.

U.S. Secretary of State Hillary Clinton said it was "the most significant sanctions Iran has ever faced."

However, analysts say it is unlikely to work in persuading Tehran to halt sensitive nuclear activity.

"This resolution, and the full panoply of sanctions that may be implemented, may slow but probably won't change Iran's nuclear policy," said Cliff Kupchan of Eurasia consultancy.

"Iranian elites across the political spectrum remain deeply committed to the program, and appear willing to inflict economic pain on the population if necessary," he said.

The West suspects Iran is seeking to develop nuclear arms.

Iran, whose leadership sees the nuclear program as the country's "inalienable right" and a source of national pride and prestige, says it only aims to generate electricity.

In addition to the latest U.N. measures, U.S. lawmakers are working on legislation to penalize fuel suppliers to Iran to add to pressure on the country.

Major European states also plan to impose further sanctions on Iran, over and above the latest U.N. steps.

A growing number of international firms have already stopped or scaled down doing business with Iran.

WHAT TO WATCH:

-- Iranian response to new sanctions, possible downgrading of cooperation with the U.N. nuclear watchdog

-- Further U.S., EU measures against Iran

GUARDS FEEL THE HEAT?

The U.N. resolution, naming the force as linked to Iran's nuclear and missile programs, blacklists 15 firms belonging to the elite Revolutionary Guards.

Branded a proliferator of weapons of mass destruction by Washington, the Guards' influence appears to have increased since Ahmadinejad came to power in 2005, helping to quell last year's huge opposition protests.

Its economic role is also on the rise, with ties to firms controlling billions of dollars in business, construction, finance and commerce, the U.S. Treasury has said.

This could make it potentially vulnerable to any effective international moves aimed at its business dealings abroad.

The force has a "pretty good network" of companies in the Gulf and elsewhere believed to be set up to buy components for Iran's missile systems and other military purposes, said London- based defense analyst Paul Beaver.

"If you can neutralize the Revolutionary Guards economically the regime will wobble," Beaver said in May. There was no sign of this happening yet, but the proposed U.N. steps would have an impact on the force and its trade transactions, he added.

But Nicole Stracke of the Gulf Research Center in Dubai said the Guards had prepared itself for possible strong sanctions.

"It is difficult for the (Western) intelligence services to track down the full activities of the Revolutionary Guards' interests inside and outside Iran," she said.

Measures targeting financial transactions are hard to enforce and may be easy to circumvent, argued Ian Anthony at the Stockholm International Peace Research Institute (SIPRI).

"The banks will know their own customers, but how to scrutinize the party on the other end of the transaction effectively? It is unlikely to be Iranian Bombmaker Ltd."

WHAT TO WATCH:

-- Guards reaction to U.N. sanctions

-- Further signs of its growing economic role in Iran

MILITARY CONFLICT?

The United States and Israel, Iran's main foes, do not rule out military action if diplomacy fails to end the nuclear row.

Israel, which is assumed to have the Middle East's only atomic arsenal, bombed an Iraqi nuclear reactor in 1981 and attacked an alleged Syrian nuclear facility in 2007.

But some analysts have questioned its ability to strike Iran, saying the potential targets are too distant, dispersed, and well-defended for Israeli warplanes to take on alone.

There is no doubt that it would be extremely difficult ... if not impossible, to destroy all relevant facilities to stop a potential Iranian nuclear weapons program," said SIPRI researcher Pieter Wezeman.

Admiral Mike Mullen, chairman of the U.S. military's Joint Chiefs of Staff, has said military options available to the United States could delay Iran's nuclear progress, but might not set the country back long-term.

Iran threatens to hit back if attacked by targeting Israel and U.S. interests in the Gulf, and by closing the Strait of Hormuz. About 40 percent of the world's traded oil leaves the Gulf region through the strategic waterway.

U.S. military firepower far exceeds that of Iran, but Tehran could retaliate by launching hit-and-run strikes in the Gulf and by using regional militant allies such as Hezbollah and Hamas.

WHAT TO WATCH:

-- Israeli statements signaling frustration at lack of crippling international measures to curb Iran's nuclear drive

-- Any U.S.-Iran incidents in Gulf, along Iraqi border